Ladies and gentlemen, good day and welcome to Zaggle Prepaid Ocean Services Limited Q1 FY 2027 earnings conference call. Before we begin, a brief disclaimer. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Dr. Raj Narayanam, Executive Chairman. Thank you, and over to you, sir.
Oh, thank you so much. A very good evening to everyone. Thank you for joining the earnings call for Zaggle Prepaid Ocean Services Limited for the first quarter of fiscal year 2027. On behalf of the company, I extend a very warm welcome to all of you and an advanced Happy Independence Day. The financial results, press release, and the investor presentation are uploaded on the stock exchange and on the company website. I hope everybody has had a chance to look at it. Now, I would like to take the opportunity to talk about Zaggle's financial update at a consolidated level. It's been a decade of sustained growth, and it has brought us to a natural and exciting reflection point. For FY 2027, for us, it's going to be about transformation through consolidation, optimizing our core operations, harnessing the power of AI, and seamlessly integrating our recent acquisitions.
We are moving from a merely profitable growth paradigm that has served us very well in the past decade to a more focused approach on improving cash flows and calibrating capitalization, which will position us well for the next phase of growth with higher margins. By taking a deliberate, focused approach to our fundamental performance today amidst rapid technological shifts and dynamic markets, we ensure our business remains resilient, agile, and positioned to drive long-term shareholder value and global scale. In Q1 FY 2027, we sustained our top-line momentum, delivering revenue of INR 423 crores at 28% year-on-year growth compared to Q1 FY 2026. Our adjusted EBITDA stood at around INR 34.7 crores, reflecting key strategic transitions that I will detail shortly. What's more encouraging, however, is our expanding revenue footprint, a clear sign of strong growing demand for our core platform.
Now, I would like to take the opportunity to elaborate more on our three focus areas: revenue, EBITDA, and operating cash flow. On revenue, our total revenue growth of 28% reflects operational momentum across both our standalone business and our subsidiaries. On a standalone basis, Q1 FY 2027 revenue reached approximately INR 390 crores, representing an 18% expansion over INR 331 crores in Q1 FY 2026. This 18% top line is particularly resilient given that Q1 is historically a soft quarter due to seasonality. Meanwhile, performance across our subsidiaries has been exceptional, and I look forward to detailing those results shortly. As always, we expect growth to accelerate through Q2 and remainder of the fiscal year. On EBITDA. In Q1 FY 2027, our adjusted EBITDA margin stands at around 8.2% as compared to 10.1% in Q1 FY 2026.
Our overall cost base, which includes employee costs as well as other expenses, went up by around 25% comparing Q1 FY 2027 to Q4 FY 2026 at a consolidated level. While we were successfully able to optimize around 15% of the cost base throughout FY 2026, which would have reflected in FY 2027, there were four major areas which contributed to the rise. Expenses related to Dice acquisition, which we absorbed when we absorbed around 100 talented AI professionals. Costs including their transfer, one-time costs. Also, would want to highlight at this point that we will start realizing the revenue from novated Dice contracts only from Q2 FY 2027. A moderated push of expenses into the P&L, which we were earlier capitalizing, and this is what we are going to continue to do it over the year.
The standard employee increments which come at the end of the financial year and gets reflected in the Q1 is also one of the reasons. Added employee costs, marketing costs, and other expenses from the acquisition of Zagg.money. Expenses related to Dice acquisitions were predominantly relocation costs for transitioning 100 employees from Pune to Hyderabad between May and June, along with one-time tech vendor payments to ensure continuity between the transition, along with one-time transaction costs reflected primarily under other expenses. With the relocation now complete, the Dice team costs from Q2 FY 2027 will sit under our employee benefit expenses. On the capitalization front, we are reviewing and updating our policies in close consultation with our advisors. Rather than waiting for a full policy rollout, we took immediate proactive measures in Q1 FY 2027 to moderate new capitalization levels.
This calibrated moderation aligns with our focus on operational prudence and ensures our P&L better reflects our run rate costs. On operating cash flow, strengthening our operating cash flow trajectory remains a key priority. We look forward to detailing our progress on the next earning calls, highlighting not only the actions, what we have already taken to improve cash conversion, but also the additional levers which we are preparing to execute going forward. Now, I would like to give you an overview of Zaggle investments and acquisitions. I would like to start off by talking about our latest investment. We have made a strategic investment of around INR 8 crores in Unobanc Private Limited, which operates under the brand of Moneyhop.
Unobanc now holds an AD Category 2 license from the Reserve Bank of India, which allows it to offer digital cross-border payments, remittances, and foreign exchange services, as well as Forex cards. Much like Zaggle, Unobanc operates a powerful B2B, B2B2C model, partnering with leading NBFCs and money changers to power seamless cross-border payments for their clients, while simultaneously driving direct-to-consumer remittances through its established B2C channel. The investment comes at an opportune time, with significant regulatory tailwinds working in our favor. Under the new guidelines of AD Category 2 entities are now permitted to process cross-border trade-related transactions up to INR 25 lakhs per transaction. The investment strategically aligns with our Save and Zoyer products to further enable Forex cards, cross-border payments, and remittances for our corporate and retail base in the future. Next, I would like to elaborate further on Dice acquisition.
Just to refresh, the deal had transitioned to an asset purchase from the erstwhile share purchase. We have secured the complete spend management product suite and intellectual property, along with their entire enterprise and partnership contract portfolio for approximately INR 68 crores excluding GST, a significant INR 55 crore optimization from the initial INR 123 crore valuation. As highlighted earlier, we have completed the relocation of around 100 talented AI professionals. The contract novation of around 85+ clients is underway, and we should complete by the end of Q2 FY 2027. One point I would like to reiterate, the revenue accruing from these contracts has not been realized in Q1 FY 2027 and will only start from Q2 onwards as part of the deal.
As a part of the novation, we have seen marquee names getting successfully novated and onboarded already, including the likes of Hindalco, Bajel, Trident Group, IDFC FIRST Bank, Lenskart, Xpressbees, amongst others. To note, we have already merged existing sales pipelines of Dice, and we will keep you posted in upcoming quarters on updates regarding the same. The acquisition of Dice has proven to be a vital catalyst for our technology roadmap, significantly accelerating our AI capabilities across both Zaggle Save and Zoyer. By integrating Dice AI-driven core technical expertise, we are enhancing automated spend analytics, intelligent approval workflows, and predictive expense management within these products, allowing us to deliver far greater operational efficiency and value to our corporate clients. This capability positions Zaggle very well to tap into other global markets like U.A.E. and U.S. as well.
In the coming quarter, we would also take the opportunity to showcase these capabilities of AI by holding our investors day, and we will let the exchanges know in advance. Next, I would like to talk about our acquisition of Rio.Money, which has been rebranded as Zagg.money. We have seen continued traction within the entire credit card on UPI and TPAP ecosystem. In our last earnings call, we had reached an annualized run rate for new acquisition of 36,000 cards within just an eight-week window. Now, I am happy to announce that we have increased the annualized run rate by almost 2.3 times to now reach around 84,000 cards in a short span of time. Along with this, we have also launched a first-of-its-kind twin co-brand card with Punjab National Bank across Visa and RuPay, which has been issued on a biodegradable plastic.
Along with this, we have also gone live with AU Small Finance Bank on both networks, which is Visa and RuPay. The program with AU not only rewards contactless and UPI spends, but also our custom value packs, enabling hyper-personalized features and reward points for consumers. On the marketing front, Zagg.money, we are actively engaging our B2B2C user base by positioning ourselves as a vibrant digital-first brand through targeted social campaigns. This quarter, we focused on major cultural moments, launching thematic campaigns around the FIFA World Cup and the release of the movie Odyssey to drive user engagement. Parallel to this, we completely revamped our co-brand user journey across both app and web, seamlessly aligning it with our upgraded brand identity, Zagg.money. I would also like to give you a little bit of policy tailwinds, which we have seen.
This opportunity to welcome the proposed amendments in the taxation and other laws amendment bill 2026, regarding a limited MDR on high-value merchant transactions. Crucially, since this policy focuses on large enterprise transactions, our sustained investments in building out the UPI ecosystem now positions us perfectly to capture enhanced transaction monetization. Next, I would like to talk about our investment in 86400, earlier known as MobileWare, which poised to enjoy the benefits from the MDR on UPI. Revenues grew from around INR 17 crores in Q1 FY2026 to INR 22 crores in Q1 FY2027, representing a YoY growth of 29%. EBITDA grew from around INR 2.8 crores in Q1 FY2026 to around INR 8.8 crores in Q1 FY2027, representing 400% YoY growth. This unprecedented growth stems from the massive growth in UPI transaction volumes.
Even with a large base, 86400 is seeing 2%-3% month-on-month growth in volumes they currently support with various banks. On the new customer acquisitions, I am happy to announce that 86400 signed its first major international partner, having partnered with LankaPay to strengthen their digital payment ecosystem. Along with this, 86400 also signed up with Union Bank of India for their Bharat Bill Payment System stack and signed up with The Maharashtra State Co-operative Bank, Ltd. for their UPI transactions. Another noteworthy and heartening point was on Eid, 86400 processed over INR 2 crore transactions, underscoring the scalability and reliability of the platform supporting peak value execution. Next, I would like to talk about GreenEdge, which runs the golf privileges program for various banks and networks like ICICI Bank, American Express, and others, along with the entire reward program for National Payments Corporation of India.
Revenues grew significantly at around 160% from INR 17 crores to around INR 44 crores in Q1 FY 2027. EBITDA grew 66% from INR 2.6 crores in Q1 FY 2026 to about INR 4.3 crores in Q1 FY 2027. We are seeing significant growth with National Payments Corporation of India, especially on the RuPay benefit program quarter on quarter, having driven deeper technical integrations to ensure seamless service delivery amongst an unprecedented growth in UPI transactions. On new customer acquisitions, we are in talks to onboard new banks in the coming quarters. Now, I would like to talk about TaxSpanner.
As guided in the last earnings call, we made a few changes in our approach, having appointed new board members to have a fresh look going into FY 2027. We have also begun the initiative of rebranding TaxSpanner to Z.tax, and we will keep all of you posted with updates on the same in the coming quarters.
I'm happy to share that TaxSpanner reported revenues of INR 80 lakhs in Q1 FY2 027, marking a 65% increase over Q1 FY 2026. This performance keeps TaxSpanner well on target to break even this financial year. What is more heartening to see is that we will have a growth of around 120% on B2B side of the business, which primarily caters to the income tax and GST compliances of the enterprise corporates. To further enhance our scope, we are also undergoing integrations with external partner ecosystem, including large payroll companies, to further strengthen the embedded tax filing opportunity. Lastly, we seek to accelerate TaxSpanner's growth by placing AI automation at the heart of the platform, allowing us to disrupt traditional tax filing models, deliver superior speed and accuracy, and expand our market footprint.
Lastly, we would like to take a disciplined, highly selective approach to M&A, prioritizing value-accretive acquisitions in adjacent domestic and international markets. Moving forward, we intend to deploy our QIP proceeds into adjacent sectors, ensuring every transaction drives meaningful synergies and accelerates our long-term growth trajectory. I would like to take this opportunity to address our AI investments as well. For us, investing in AI is a very crucial driver in transforming Zaggle from a traditional platform into an indispensable autonomous financial operating system. As enterprise market requirements rapidly shift from simple digitization towards real-time governance and predictive intelligence, our AI investment ensures we stay ahead of evolving client expectations. By embedding AI natively across Save, Zoyer, and Propel, we automate complex spend patterns and compliance workflows at scale. We are actively taking on larger and more complex enterprise problem statements.
Beyond basic spend reporting, our platforms now solve sophisticated corporate challenges, including multi-entity accounts, payables and procure-to-pay automation, dynamic tax compliance, predictive cash flow visibility, and deeper ERP integrations. Solving these mission-critical pain points for larger corporates naturally is leading to significantly higher contract values and margins, stickier client relationships, and significantly increased switching costs, cementing Zaggle as an essential operational engine for enterprise clients. While we continue to invest and actively look at building these next-generation AI capabilities, I want to reassure our shareholders that we remain deeply mindful of our cost structure. We are disciplined in moderating our execution expenses, ensuring that capital is deployed prudently without compromising on operational efficiency. However, we firmly believe that the long-term strategic returns will far outweigh current development costs.
History has shown us that moments of foundational technology shifts, much like the advent of the internet or the migration to cloud computing, reward those who build ahead of the curve. By absorbing these upfront development costs today, we are positioning Zaggle to capture a lion's share of tomorrow's market, securing high-margin recurring revenue and a structural competitive advantage that will compound value for years to come. I would like to give an update on our international expansion plans. We are in the process of opening a subsidiary in ADGM, Abu Dhabi Global Market, International Financial Center, and free economic zone within this quarter, which is Q2 FY 2027. While we remain mindful of regional volatility, our engagement with local government, banking, and commercial partners has met with overwhelming interest. Furthermore, through the Dice acquisition, we inherited key client relationships that clearly validate our product-market fit.
As a result, we are prepared to enter the UAE with our core product stack, Save, Zoyer, and Propel, to capture significant market share in an expanding sector with a fragmented competitive landscape. With this, I now hand over to our CEO and MD, Mr. Avinash Godkhindi.
Thank you, Dr. Raj. A very warm welcome to everyone joining us on the call today. I would like to give an overview of a few key metrics. I am happy to share that today around 4 million users actively use Zaggle-powered cards and software platform, a strong testament to the scalability and adoption of our platform. We now serve more than 4,000 customers across a wide spectrum of industries and sectors. Talking about our consolidated revenue mix this quarter, the SaaS platform fees contributed around INR 12.5 crores. Program fees contributed around INR 160 crores. Propel Points contributed around INR 251 crores. Now to talk about a few business highlights. I would like to start talking with the Save business.
As Dr. Raj mentioned, on the tax benefit side of the business, as guided last quarter, we have seen significant favorable tailwinds with the new income tax regulations, which not only added wallets for the new tax regime.
Hello, Avinash sir.
Fees are in the per-user wallet for existing as well as new corporate customers. We have signed multiple marquee names, including Radisson Hotels, SCA, Avigna India, Slice Small Finance Bank, Bikaji Foods, Bureau Veritas, Nuvama Wealth, amongst others, and have a large pipeline to showcase for Q2 and forward. Post the income tax regulations, we have also seen a significant increase in the onboarded user count across our entire customer base. While the focus has been on new client acquisition, around 73% of the new users onboarded came from our existing corporates, where we were able to upsell new wallets and add new users. On the travel and reimbursement side of the Save business, while we have onboarded marquee names such as APAC Financial Services, Ark Infosystems, and GSK India, amongst others.
As highlighted by Raj earlier, we have also onboarded clients from Dice, such as IDFC FIRST Bank, Manipal Hospitals, Barclays, amongst others, whose billing will begin in Q2 FY 2027. Next, I would like to talk about key updates in our Zoyer business. We have seen a very positive uptake in the Zoyer business with focused AI-driven rollouts of earlier signed customers. One such example is a large retail chain we signed up a few quarters back, where we have already onboarded about 2,000 stores with an impending rollout of the balance 17,000 odd stores in the coming months.
We signed up a few marquee names as well, such as Diesel Fashion, Okakura Lifestyle, AppsForBharat, CBM Retails Private Limited, amongst many others. We have also inherited clients from Dice such as Hindalco, Bajaj Group projects such as Bejel, Dezerv, Navi, and many others whose billing is going to begin from Q2 of FY 2027. Next, I would like to talk of key updates in our Propel business, and would like to start with a small case study. A strong example of Propel's enterprise traction is a recent deployment in a large entity managing 5,000+ channel partners.
The client was constrained by legacy offline voucher business tied with a significant working capital and prevented real-time program tracking. We addressed this by implementing Propel, automating their incentive delivery while providing real-time analytics to boost partner engagement. Additionally, transitioning from what they were using was a single-brand voucher to a multi-brand voucher and multi-brand digital point system effectively released blocked working capital for the customer and created a vastly superior partner experience. During the quarter, we have signed up marquee names such as Compagnie de Saint-Gobain S.A., Supreme Pipes, Phoenix India, amongst others. Next, I would like to talk about the key updates in our fleet business.
Having captured a majority market share in the CDG, City Gas Distribution companies, we are seeing major traction coming with much faster rollouts in these programs. Comparing Q1 FY 2027 to Q1 FY 2026, we have seen a remarkable 43% increase in the total transactions, along with a resounding 53% increase in transaction value, which has reached an annualized spend rate of INR 100 crores as of today. We are focused over the last few quarters on driving higher revenue and transaction volumes in the existing programs, and we look for fleet programs to meaningfully contribute to our top line and bottom line in the coming quarters. I am also very happy to announce that we have signed our first contract with one of the three OMCs, oil marketing companies, which highlights the effort we have been putting in this space over the last two, three years.
We have signed a five-year agreement with HPCL as an aggregator for their flagship Driver Track Plus, DT Plus program to facilitate purchase of petroleum products and enable additional discounts and benefits to the entire corporate and retail base of Zaggle. As a part of this agreement, we also get to add incentives for driving these spends towards HPCL, so Zaggle also gets bottom-line benefit. I will keep you all posted on the go-live and the corresponding monetization of this program in the subsequent quarters. Now, I want to briefly touch base on our cross-sell initiatives. Leveraging AI, we have equipped our on-ground sales teams to pitch and solution for multiple products in the same go while dealing with different stakeholders across varied problem statements.
In Q1 FY 2027, we saw cases like APAC Financial Services, where we were able to cross-sell Save and Zoyer products right at the initial stage itself. Other marquee cross-sell wins have been Campus Activewear, TurtlePanda Fashion, Web Bazaar, Impresario Entertainment, Quess Corp, amongst others. To elaborate a few cases further, Campus Activewear is an existing customer for the Zoyer solutions, mainly leveraging the BROM solution for their retail stores. In light of the new income tax regulations, we recognized the potential for further collaboration and successfully plugged in our Zaggle Save solution for their employee base for tax benefits. Similarly, Quess Corp is an existing customer for our Save solution for its large corporate base.
Keeping in mind their complex procurement workflow requirements, along with the corresponding compliance requirements, we recognized the potential for further collaboration and successfully plugged in not only our Zoyer solution but also the TaxSpanner solution. As Dr. Raj highlighted earlier on our investments in AI, allowing us to pick more complex use cases. I would like to elaborate further on one specific use case of one of our large clients in the manufacturing space. The client is currently facing with an entire manual reconciliation process with complex workflows and currently uses one of the larger ERP systems to facilitate the entire procurement journey. We are working with them on the following solutions, which involve purchase order, invoice processing, and validation across 24 parameters for offline and online channels.
Purchase orders which require inspection will now be a three- and four-way matching of purchase orders, invoices, goods received notes, and delivery challans . Along with facilitating validation of more than 24 parameters, enabling complete automation of the validation and exception routing workflow. As a part of the workflow, we enabled a fully automated liquidation damages evaluation, calculation, and routing workflow for eight delivery scenarios, where the relevant commission terms are extracted from PO and measured against the goods received note and invoice, along with the e-way bill. Payment retention and hold automation, which holds or releases payments to vendors once all relevant compliance checks of the shipment have been met, measuring against all documented touch points, removing all human intervention barring as requested specifically by the client.
Auto-picking of relevant tax compliances on TDS and GST in a pre-configured tax rule engine, which applies relevant tax rates depending on the nature of the supply and vendor categories on the basis of threshold limits. The creation and deployment of the configuration of solutions in a very short span of time has been made possible by leveraging AI solutions at scale. Lastly, I would like to take all of you through some of the key financial updates. With reference to Propel Points margin on a consolidated basis, we have reached a margin of 7.1%, with heavy attribution to GreenEdge higher margins. On a standalone basis, Propel margins stood around 5%, which is a significant improvement from our Q4 FY 2026 margins. As mentioned previously, we had a tail of a few overriding commissions that we realized in Q1 of FY 2027.
With reference to cashback as a percentage of program fees, we saw cashback of 66.3% in Q1 FY 2027, which is a marginal increase to a cashback of 65.7% in Q1 FY 2026, but a significant drop from our Q4 FY 2026, where the cashback was closer to 69%. The marginal increases as compared to Q1 FY 2026 is primarily on account of mix of higher corporate credit cards as compared to prepaid cards. As you know, credit cards have a higher share of cashback attached to it because we include the cost of funds there, and hence the marginal increase. With reference to standalone employee costs, we expect employee costs to go up in Q2 FY 2027 to the tune of Dice employees who have come on board during the quarter as highlighted previously. With reference to other expenses, Dr. Raj has addressed the one-time nature of the increase.
Going forward, we expect this to taper down starting Q2 to give more realistic picture on how the P&L will be shaping up. With that, I would like to conclude my update, and we are happy to open the floor for questions. Thank you so much.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may please press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference call, please limit your question to two per participant. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Siva from iThought PMS. Please proceed with your question.
Hi, sir. Am I audible?
Yeah.
Yeah. Firstly, on our revenue growth, it has slowed down significantly. This is majorly due to both the program fee and SaaS fee. Why is this exactly the case? Could you explain?
Yeah. On the revenue growth, I think Q1 is typically about 18% out of the entire year. The growth rate, which is about 27%, we see that in the coming months, it would significantly increase.
Got it. But I'm asking this question, sir, because we've been growing at 40%- 50% for the past five, six quarters, and I believe you also guided for 40%- 45% on a console basis this year.
Yeah.
We've already dropped to 28%. Do we still keep up with that guidance?
Sir, Avinash's side, I just want to add what Dr. Raj said. Two clear factors. The SaaS revenue gets augmented, starting Q2, with Dice numbers. While we've taken the cost and done the work for those contracts in Q1, that revenue has not come in. That's on the SaaS side. On the program fee side, we have taken a very conscious call. Overall, sir, the business, we've taken a very conscious call to optimize for both cash flows and to work on controlling or calibrating our capitalization. Hence, those banks where our working capital cycles have been longer, we have taken the decision this financial year that we will move some of those customers to a different bank. That retarding process also takes some time.
But that's a call that we have taken to make sure that as we go through the year, the cash flows improve, and we are moving volumes to those banks where we are getting realization of our revenues faster.
Our guidance was 40% on a consolidated basis, and we are not moving away from that guidance as yet.
Thank you, sir. The next question is on the line of Deepak Poddar from Sapphire Capital. Please proceed with your question.
Yeah. Am I audible, sir?
Yeah, you are.
Yes, sir.
Sir, just now wanted to understand now with this Dice consolidation, I think you mentioned that you are going to provide the EBITDA guidance, right? Can you throw some more light? How should one look at your EBITDA margins going forward or this year?
This year, if you look-
Hello. Sir, you are not audible, sir. Yeah.
Am I audible now?
Yes, sir.
Okay. If you see our consolidated EBITDA margin is about 8.2%. What we see is in the coming months, we will come to know more closely as the revenue from Dice also kicks in. Right now, only the cost has come in but the revenue has not come in. We will guide in the coming quarters on the EBITDA margin.
Okay.
But-
So-
When say-
Hello?
Yeah.
When you say only cost has come in and revenue has not come, so ideally when the revenue comes in coming quarters, you will see only an upside potential on your margins, right?
Correct. If you see, about INR 3 crores is the cost which came in the last two months of the last quarter. We were not able to have any revenue because contractually the revenue is to start from July 1st. We are hopeful that when revenue kicks in, margin should improve.
Margin should improve. So, ideally, this is the lowest point of the margin, I mean, 8.2%. Ideally, coming quarters we will see a better margins profile, right?
They are there. We are improving on, if you see, we have reached about 80 odd thousand cards on Zagg.money. And if you see that on Zagg.money we have lost, which is what we had earlier guided that about INR 2.5 crores is what we have lost on Zagg.money. So the whole idea is that while we are continuously bringing in operational efficiencies, but all the other investments which we had taken, we have to keep that into account as well.
Thank you, sir. The next question is on the line of Ankush Agrawal from Surge Capital. Please proceed with your question.
Yeah, hi. The first thing I want to understand is this selective pushing of expense which were earlier capitalized now to P&L. So firstly, if you can explain what is the nature of this expense, why were earlier these being capitalized and not pulled into expense? And now also when you are looking to sort of expense this out, why are we still doing it selectively and not the whole amount?
There is no selective capitalization which is there. This is a part of the process that eventually we are moving towards expensing all the. If in an ideal state, I would say that we will go ahead and expense all the costs, but as a process, it will take us a significant period of time to be able to do it. What we are doing is the cost, whichever we think that can be expensed is what we are moving towards expensing it.
What are the nature of cost which?
Just to add a couple of points here, Avinash's side. One, we are looking at our capitalization policy, and we will give more clarity in the coming quarters. The second, of course, sir, you will appreciate that this is a decision that we need to take in conjunction with our auditors, and we need to be able to convince them also as to what are the expenses that come into the P&L straight off the bat and what gets capitalized.
Yeah. I just wanted to understand this, please. What are the expense which were earlier being capitalized and now you feel that you should expense them? If you can, whether it is a product development expense or something else, if you can add it.
Yes.
No, this is infra costs. Sorry, go ahead.
This is some of the product development costs which we have taken, okay, on one particular product which is like an immediate product which is required by the clients in the market. What we did was that particular cost which we did, which was roughly about six odd crores is what we have gone and expensed it completely. And the policy is going to be that we expense more than we capitalize over a period of time.
Thank you, sir. Ladies and gentlemen, to ask a question, please press star and one now. Participants who wish to ask questions may please press star and one at this time. The next question is on the line of Anil Nahata from Parami Financial. Please proceed with your question.
Yeah. Hello.
Hi.
Dr. Raj and Avinash, I would just have a couple of questions. The first set of questions are around the Dice acquisition. Congratulations on completing the Dice acquisition.
Have we completed the technical integration of our payment rails with the Dice software? Have we started converting customers on the payment rails on Dice?
Majority of the integration is done. Okay? Last bit of integration, which is pending, will get completed probably by August 31st or max September 10th. Once we have done that, it will be like a complete integration.
Basically, can we look forward to Q3 onwards having some sort of payments related revenues coming from Dice as well?
Hundred percent. Without a doubt.
Thank you, sir. The next question is from the line of Piyush Narang from Narang Family Office. Please proceed with your question.
Hi. I wanted to check on what is the median revenue per customer, if you can share that.
It is roughly, if you take about INR 423 crores divided by about 4,000 customers. That is what is the revenue per customer.
Okay. Just to confirm on Dice.
Yeah.
You are saying the revenue starts flowing from Q2 or Q3?
Revenue starts from Q2. Okay, so July 1st was the date, and it has already started. Some of the money has already started coming in. The full pickup will happen from Q3 when we hope that by Q3, all the contracts would have novated.
Thank you, sir. Ladies and gentlemen, in order to ensure that management is able to address questions from all the participants in the conference call, please limit your question to two per participant. The next question is from the line of Ankush Agrawal from Surge Capital. Please proceed with your question.
Right. The second question that I had was around this slowdown in program fee. Although you have alluded a bit about it, for the rest of the year, how should we look at it? Would it be one of those years wherein we are sort of consolidating the program fee growth would be like low teens, mid teens, because 10% program fee growth is the lowest what we have seen in last three odd years of our journey. Since this is one of the major revenue for the standalone business and therein we have guided for 20%, 30%, 25%, 30%. Just trying to understand if we are still on that track or we are again changing some guidance around that.
Yeah. As we alluded in the speech as well, the primary focus is on cash flow optimization as well as calibrated capitalization. Having said that, the growth in program fees should improve in the coming quarters. There's been some geopolitical tailwinds, especially for travel as well, which has had an impact, overall in terms of the spends. Frankly speaking, we are more worried on three things. One is the cash flow, the second is the capitalization, and third, if you were to ask me how much of a percentage of program fee is cashback rather than just INR or dollar value of program fees. We are primarily optimizing on these, and not so much on the raw number in terms of program fees.
But just to answer your question, you would see a significant improvement in coming quarters on the program fees. The 10% growth is by design, and the growth should improve in the months itself.
Okay. But that should mean that when we have Q2 results, there should be meaningful improvement in cash flows and the incentives as well, because if you're optimizing for that and the growth is obviously lowered down substantially, that should reflect in your working capital cash flows and improvement in the incentive cost, which again, in Q1 isn't there. But by H2 that should happen, right? If you're saying that you're sort of optimizing for it.
The intent is that, but all these actions have their own gestation period, and to be very honest, we don't have a real immediate handle that we press a button and this happens. You would appreciate that these have gestation period. That's what the effort is. And we are hopeful that you'll see some improvement across these matrices.
Thank you, sir. The next question is from the line of Gaurav Shukla from Finvestor. Please proceed with your question.
Am I audible, sir?
Yeah.
Yes, sir.
Thank you, sir, for giving me opportunity. Sir, as you said that your guidance is 50%, what is the key growth areas for this? How we grow? As in first quarter we have INR 323 crore revenue. So in next three quarters, we have to do 1.5x of this.
Sorry, sir.
Otherwise
Unable to hear you clearly at all.
Gaurav sir.
Sir, I-
Can you please use your handsets?
Yes, I am using handset. Sir, am I audible?
Voice is little muffled, sir. We cannot hear you properly.
Sir, am I audible? Not clear?
No, sir. We will request you to come back in the queue for the next question.
Okay.
Thank you, sir. The next question is from the line of Abhi from AJ Capital. Please proceed with your question.
Hi, good evening. Hope I am audible.
Yeah, you are audible.
My first question was on the revenue growth itself. Now, obviously, you are also alluding that we should start looking at revenue excluding the cashback because that gives us the right picture. Just on a net revenue basis, what I am calculating is that versus quarter one of FY 2026, this quarter we are up almost close to about 16%, if I talk about excluding the cashbacks. GMV seems to be up about almost 10%, and revenue per customer seems to be up almost about 3%. Obviously, this quarter revenue also includes INR 44 crores of GreenEdge gross revenue that was not there in the base quarter. I just want to understand what was the organic net revenue growth excluding GreenEdge and Bagman.
If we just talk about the core engine that was there in the last quarter versus this quarter, because it seems like that has slowed down a bit this year.
It is about 18% is the growth on a standalone basis, and which we had projected that overall it would be about in the 25% range is what we had projected for the standalone. We still stand by that guidance that we would be able to grow to that number for the entire year. The growth which you are seeing on a consolidated basis is roughly about 28%, which we hope to be in the range of 40% as we go through the year.
Okay. I had another question. Can I pitch in?
Please.
Okay. Obviously, this quarter, the Dice acquisition has hurt the operating margins, and I understand that is completely justified. It is a good practice that you are bringing out the capitalized cost back into the P&L. It helps the company in the long run. What takes it away is that because of these adjustments, that EBITDA margin that we have always been guiding for the last many years and many dealing interactions with investors, et cetera, that we will be targeting a 13%-15% EBITDA margin. The clarity around it seems to be vanishing every quarter because the EBITDA margin per se in itself has become quite volatile. It has become very difficult to project what that EBITDA margin would be. Could you help us understand when will that trajectory come back? When will we see a ceiling in the EBITDA margin? When it will become stable?
It can be 10%, it can be 11%, but when will we see stability? It has almost been six quarters of quite a volatile EBITDA margin.
No. If you really look at it is not. We have been in the 9%-10% range for the last eight quarters. Okay. That has been the case all around for last eight quarters. What we have guided that 14%-15% margin is over a period of five to seven years. The measures which we are taking today are basically to moving the trajectory towards that margin of 14%-15% over a period of five, seven years. That is the reason we are doing lot of this capitalization. We are bringing it to expense. That keeps the balance sheet more clean. The second thing is to focus on the free cash flows.
Any cash flow which has to be corrected from a negative cash flow to a positive cash flow would take about 16- 18 months over that kind of a period of time. All this we are doing is in the short term, which is, I would say, you take 15- 18 months is how you take that period, and post that it is the normal growth. The other thing you look at is that some of the acquisitions which we have done, and the company has concentrated lot of time and effort in acquiring these companies. Some of these companies' valuations have shot up by 5, 6x, which is not getting reflected in our stock today.
What we hope is that by keeping on this trajectory, ensuring that we use capitalization very. We use our expense policy rather than capitalization going forward, focusing a lot on cash flow and grow the revenue would be the three levers which would help us in the future. To answer to your question, partly that the volatility has not been there. It has been in the 9%- 10% range, and this quarter it has come down, and as we had told that we are doing an acquisition. Some of these acquisitions take time to prosper and flower.
Thank you, sir. The next question is on the line of Achut from Rockstar Equity Research. Please proceed with your question.
I have only one question. This quarter, previously the growth was good, sir, but the cash flows are not there. Now you are mentioning that you are focusing on cash flows, for which you need to let go of the growth. I want to understand when can we expect both, sir? When can we expect good growth with good cash flow?
Sir, what you are asking is something which we are striving for, okay? As you know, it's a process. Every quarter, you will see that we'll work harder and harder on ensuring that we grow, okay, and we grow positively, which means that the growth is there and cash flow positiveness should come. Every quarter is what our focus is, every month is what our focus is, every day is what our focus is right now. We want to ensure that we don't compromise either of the two.
Okay. Sir, and one more thing, I think in the last interview in some TV channel, you mentioned that you are planning to buy shares from open market. But after that, we haven't seen much purchase from promoter. Is there any plan of purchasing shares at this price, sir, as stock is down and all?
Sir, we employed professionals in the company, sir. Whatever money we came in, and last time also, as I said, we immediately had INR 5 crores liquidity. We immediately bought INR 5 crores worth of stock. As we get liquidity, we'll keep on buying the stock. That is our standard, and this is not something which we announced last time when we bought. Previous to that also, we had bought shares. Previous to that also we had bought shares. Every time, we have not sold a single share. We have been only buying shares.
Thank you, sir. The next question is on the line of Shivam Rathore from MB Investment. Please proceed with your question. Mr. Shivam, your line has been unmuted.
Okay. Thank you, ma'am. Sir, as you are investing heavily in AI across Zoyer and Save & Propel, at what point do you expect AI to become a meaningful revenue driver rather than primarily a cost efficiency initiative?
I will tell you on AI, the impact of AI on the business, there are two kinds of impact. One is the internal impact and one is the external impact. A key point which I addressed in my speech was that last year we were able to optimize a fair degree of entire cost base through FY 2026 only on account of internal development done using AI. This is around 12.5% of the expensed cost base. The whole idea is that we have reduced new feature launch timelines by up to 50%. On the external impact, look at it now we are able to go to a client, tell him that we are able to solve much more complex problems for them, and to significantly large corporate, we have been able to do it with our AI.
In fact, our Project Shiva, which is called Zaggle Brain, we will showcase that and we will probably file it on the exchange also in the coming months. It is a beautiful philosophy for which we will go for patent as well. All of these are already started to show some kind of a payback period itself, right? So even every contract we are seeing that we are able to go ahead and make some money basis AI. As Avinash Godkhindi had also mentioned, some of the large customers, very, very large, these are very, very large customers who have come in, is on the strength of our product Propel AI, Save AI, on P2P AI and expense management. A lot of these things have. The payback will become much, much faster in the coming months and quarters.
Okay, sir. And, sir, as you have told, Dice will be accepted from FY 2027. How much percentage are we expecting? What revenue we are expecting from Dice?
Sir, last year they had done about 12 odd crores. We expect that at least we are able to achieve anywhere between 15 to 16 crores this year. As you know, gross margins there are about 90%+ . We expect that we should be able to do that. Next year, probably much, much better because the full year impact will come in, as well as all the efficiencies related to we putting the payment rails into Dice software will also yield good results.
Thank you, sir. Ladies and gentlemen, in the interest of time, that was the last question for today. I would now like to hand the conference over to management for closing comments. Thank you and over to you, sir.
Thank you all for participating in today's call. We hope we have addressed all your queries and provided valuable insights. We remain optimistic and focused on the future growth of the company, and we are excited about the opportunities ahead. For any further information, we request you to get in touch with SGA, our investor relations advisor. Thank you and have a nice day and a great advance Independence Day to all of you.
Thank you, sir. On behalf of Zaggle Prepaid Ocean Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines. Thank you.